Union Pacific on Thursday reported higher first-quarter earnings and said it is readying regulators’ review of its proposed acquisition of Norfolk Southern, after the Surface Transportation Board rejected the company’s first bid for approval and asked for more information.
The Omaha, Nebraska-based railroad said it earned $1.7 billion, or $2.87 per share, in the quarter, which it described as 5% higher than the prior year. Union Pacific said merger-related costs weighed down results by 6 cents per share, while still topping analysts’ expectations of $2.86 per share, according to the company’s report.
Union Pacific’s revenue rose 3% to $6.22 billion, even as the railroad said it hauled about 1% fewer shipments. The company attributed the increase to continued growth in the rates it charges and to fuel surcharge fees, while expenses also rose 3% to $3.76 billion.
In its outlook, Union Pacific affirmed its expectation for midsingle digit growth in earnings per share in 2026 and said it plans to invest $3.3 billion in its operations. The company said it continued to get more efficient during the quarter as it benefited from higher rates while it prepared its broader regulatory case for the Norfolk Southern deal.
Union Pacific said it plans to resubmit its application to acquire Norfolk Southern next week. The Surface Transportation Board rejected the railroad’s first request, and Union Pacific said regulators wanted more information; the board has not yet decided whether the merger—expected to reduce the number of major freight railroads to five—would enhance competition.
CEO Jim Vena told investors that the company is becoming more convinced of the deal’s merits as it builds the application. Vena said, “Service is going to be better. We provide more opportunity. We take trucks off of the highway and our employees are guaranteed jobs,” and he said he is “more convicted now that this is good for country and good for our shareholders,” adding that Union Pacific is also “more convicted” that the acquisition would benefit the company and the country.
The merger has produced divisions among labor and shippers, according to Union Pacific’s report. The company said the deal has support among the nation’s largest rail union and several other unions that backed it after Union Pacific promised their workers would have jobs for life, while two other major unions representing engineers and track maintenance workers oppose the proposal.
Shippers and trade groups also remain split, with the company noting concerns from groups representing chemical makers and agricultural businesses even as “hundreds of other businesses” have lined up behind the merger. The report also said President Donald Trump has said the deal sounds good to him.
Vena has argued that creating a coast-to-coast railroad would help the economy by reducing hand-offs between railroads in the middle of the country, allowing shipments to move faster and better compete with trucking.
Sources: Associated Press; reporting by Josh Funk.